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QE1 ’

On Monday November 26, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (14:35)

Ryan and Louis discuss the fiscal cliff. Louis predicts that Congress will come up with a solution and that we have already gone off the fiscal cliff, they just don’t want to pull the parachute. Louis notes that the deficit is $16 Trillion and unfunded liabilities are $86 trillion and no amount of taxes or growth will be able to pay off that amount of debt.

Louis notes that Congress is worried about avoiding the automatic spending cuts and taxes increases scheduled to prevent a recession. Louis notes that there would be a recession, but that the recession is the cure to the poor economy, but that Congress will have no interest in really cutting spending. Louis notes that if Congress avoids the “fiscal cliff’ the markets will rally.

Louis notes that most of the revenues don’t come from taxes but from borrowing from foreign sovereigns and from the Federal Reserve buying US Treasuries with money they print out of thin air. Louis notes that on top of printing money to fund deficits, the Fed also attempts to stimulate the economy with QE1, 2 & 3 which involves printing money out of thin air to buy US treasuries and mortgage securities.

Louis notes that all the printing and spending will end badly but there is no appetite to stop it because government always needs money and its citizens are always willing to take the money that government redistributes.

Louis predicts that taxing the “rich” will also be part of the solution to the fiscal cliff. Louis notes that this will not solve the deficit problem and only gives expression to envy. Louis notes that people are always in favor of higher taxes -on somebody else. Louis notes that taxing the rich is a slippery slope as 90 percent of the population can vote to raise taxes on the top 10% , then 80% to raise taxes on the top 20% and eventually 51% to raise taxes on the top 49% which Louis views as mobocracy.

Louis notes that as part of the fiscal cliff solution there won’t be spending cuts, just cuts in the growth in the rate of spending.

Ryan describes this type of solution as just kicking the can down the road. Ryan notes that taxing the rich will back fire as they will cut their workforces. Ryan notes that politicians don’t understand economics 101. Louis notes that politicians may or may not understand economics 101, but they do understand politics 101. Louis notes that people don’t understand that you can take ALL of the wealth from the wealthy and that would run the government for just a few hundred days.

Louis notes that the problem is spending and that people want things from government and they want someone else to pay for it.

Louis notes that the Fed is Congress’ best friend as it enables them to continue spending without having to go back to the tax payers to ask for more money.

Louis notes the market will eventually the Fed, once borrowers realizes that the Fed will continue to devalue the currency that its bonds are denominated in and when that happens interest rates will rise and the dollar drops and the spending won’t be able to continue. At that point there will be inflation and you will be lucky to own commodities and real estate.

Louis predicts that if Congress avoids the fiscal cliff, the rating agencies may down grade the US debt rating and that may cause the dollar to drop and interest rates to rise.

Louis notes that taxing the rich can not pay off the deficit and that taxing the rich is a populist concept, not an economic one

On Monday July 2, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (15:51)

Ryan reviews the unemployment numbers. Louis notes that people are looking to central planing and stimulus QE1 and QE2 to solve economic problems rather than the free market. Louis notes that printing money just adds to the money supply and causes inflation. Louis notes that because interest rates are lower people put their money in the stock market causing the stock market to go higher and making people believe that the economy is better. Companies also buy back their shares instead of investing their cash which also raises stock values. Louis notes that an economy grows from investing savings not from borrowing money to buy things. Ryan notes John Williams San Francisco Fed President’s remarks that predict a stronger dollar low inflation and high unemployment. Louis notes that increasing taxes will harm the economy as it will not go towards deficit reduction but towards more spending. Louis notes that if government spending were cut, the private sector would get that capital and allocate it more efficiently than the government. Louis notes a recent survey where a majority of people said they would take reduced government for a reduction in taxes. Ryan and Louis discuss the recent government food stamp commercials. Louis and Ryan discuss the student debt issue and how it an high unemployment rates among young people will prevent them from buying homes.Continue reading this post

On Monday November 7, 2011, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate Radio show on The Big Talker 1580 AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (13:55)

Ryan notes that there is a city near Detroit, Hyland Park that has turned off the city’s electricity and pulled out the street lights because they can not pay the electric bills. Louis notes that this is considered “austerity”. Louis notes that local governments should be able to provide the necessities(fire, police, water and lighting) if the money was managed properly.

Instead local governments rely on bond issues and getting money from Washington to pay for government services. Louis notes the irony of hiring local politicians to get money sent to Washington back to the local municipality. Louis also notes that governments generally don’t threatened to cut the non essentials and when they are short on cash, but rather threaten the essential services in order to extract more money. Ryan and Louis discuss the raising of bank fees on consumers and the backlash that it has created, leading to the Bank of America has retracted their intention to charge consumers to use their bank cards.

Louis notes that the entire episode was the unintended consequence of government intervention. Ryan discusses the best way to shop for a mortgage. Ryan discusses factors that impact mortgage interest rates. Ryan notes that the treasury will sell $72 billion of bonds. Ryan notes the change of government in Greece and that the contagion has spread to Italy. Louis notes the the Greek crisis has been lingering because the central bank has been propping them up.

Louis also notes that if more municipalities can not provide services, the Fed may provide a bail out. This would lead to higher interest rates and inflation. Louis predicts that the dollar will out last the Euro in that it can probably print more money and that eventually, entities including sovereigns, must be allowed to fail. Louis notes that the Federal Deposit Insurance Corporation creates a moral hazard. Louis and Ryan discuss fractional reserve banking and its role in creating the potential for bank runs.

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